Dear Momentum Options Subscriber,

The bears made a brief appearance on Monday following three weeks of hibernation, but they did little damage in their efforts to slow the momentum. The small-caps had their 15-session win streak halted, although the pullback held rising support and last Monday’s levels. The close off of the lows was slightly bullish, but volatility rose to a level that needs to be respected.

The Dow fell 54 points, or 0.3%, to close at 19,098. The blue-chips traded in the red throughout Monday’s action, with the low checking in at 19,072. Short-term support at 19,000-18,900 held, with backup at 18,800. Resistance and blue-sky territory remains at 19,200-19,325.

The S&P 500 stumbled 11 points, or 0.5%, to finish at 2,201. The index opened lower at 2,211 and traded down to 2,200 ahead of the closing bell. Upper support at 2,200-2,190 was defended, but a close below 2,185 would be a reason for caution. Resistance has moved down to 2,215-2,225.

The Nasdaq tumbled 30 points, or 0.6%, to settle at 5,368. Tech opened at 5,387 and bottomed at 5,364 late in the day. The close between fresh support at 5,375-5,350 was a neutral signal, with a move below the latter likely leading to additional weakness to 5,325-5,300. Resistance at 5,400 has been a short-term hassle, with additional fluff targets to 5,450-5,500 on continued closes above this level.

The Russell 2000 sank 17 points, or 1.3%, to end at 1,329. The small-caps opened less than a half of a point lower at 1,346 before a stair-stepping fade to 1,328 ahead of the close. I mentioned yesterday morning that there was backup help at 1,330-1,325 on a move below shaky support at 1,340. It was good to see these levels hold, but there is risk to 1,315-1,300 on continued weakness. The 1,340-1,345 area is now near-term resistance.

The S&P 500 Volatility Index ($VIX, 13.15, up 0.81) traded higher throughout the session, with the peak reaching 13.50 shortly after the open. Resistance at 13-13.50 held, with risk to 14.50-15 on a close above the latter. Support remains at 12-11.50 on a recovery of the 12.50 level.

I have another update for our Lattice Semiconductor (LSCC) trade listed below, so let’s go check the action.

From desk to press, futures look like this: Dow (+18); S&P 500 (+2); Nasdaq 100 (+5); Russell (+1).

Momentum Options Play List

Closed Momentum Options Trades for 2016: 80-33 (71%). All trades are dated and time stamped so new subscribers can look at the past history to see how the trades have played out.

Do not risk more than 5% of your trading account on any one trade but do try to take all of the trades. Please remember, all “Exit Targets” and “Stop Targets” are targets. You should not have any “Hard Stops” entered to close any trades or “Exit Orders” in your brokerage account unless I list one. I will send out a “Profit Alert” or “New Trade” if I want you to close a position or if a new trade comes out. Otherwise, follow instructions at all times in the 9 a.m. and 12 p.m. – 1 p.m. updates. Also, I will usually give you a heads-up if I think I’m going to send an email outside of these time frames.

All prices given in this update are current as of 8:00 a.m. EST.

I hereby disclose that I will be participating in the following trade(s).


Lattice Semiconductor (LSCC, $7.09, down $0.16)

LSCC December 7.50 calls (LSCC161216C00007500, $0.02, down $0.03)

Entry Price: $0.30 (10/12/2016)

Exit Target: $0.60 (Limit Order)

Return: -93%

Stop Target: None

Action: There was no bid to close the trade yesterday, so the position is still open. I mentioned that these call options could expire worthless, so let’s cancel the sell to close order and see where shares are by Friday’s close. If a bid returns, I will issue another update. These options expire two weeks from this Friday.

Support is at $7-$6.75. Resistance is at $7.20-$7.25.


Chicago Bridge & Iron (CBI, $32.82, down $0.86)

CBI January 35 calls (CBI170120C00035000, $0.90, down $0.28)

Entry Price: $1.25 (11/25/2016)

Exit Target: $2.50

Return: -28%

Stop Target: None

Action: Monday’s low tapped $32.72. Support is at $32.75-$32.50. Resistance is at $33-$33.50.


T-Mobile (TMUS, $54.98, up $0.39)

TMUS December 56 calls (TMUS161216C00056000, $0.75, down $0.08)

Entry Price: $0.75 (11/25/2016)

Exit Target: $1.50

Return: 0%

Stop Target: None

Action: Shares tested a fresh 52-week peak of $55.03 yesterday. Resistance is at $55, with continued closes above this level leading to blue-sky territory towards $57.50-$60. Support is trying to move up to $54.50-$54.


Imax (IMAX, $32.05, down $2.45)

IMAX January 36 calls (IMAX170120C00036000, $0.45, down $0.50)

Entry Price: $0.90 (11/23/2016)

Exit Target: $1.80

Return: -50%

Stop Target: None

Action: Support is at $32-$31.75. Resistance is at $32.50-$32.75. I would like to see shares recover $33.50 this week. I still like the trade as long as the $31 holds on continued weakness.

You can read my previous comments on IMAX in yesterday’s Pre-Market Update.


Microsoft (MSFT, $60.61, up $0.08)

MSFT December 62.50 calls (MSFT161216C00062500, $0.25, down $0.01)

Entry Price: $0.45 (11/22/2016)

Exit Target: $1.00

Return: -44%

Stop Target: None

Action: Resistance is at $60.75-$61. Yesterday’s high reached $61.02. Short-term support is at $60.50-$60.


Tower Semiconductor (TSEM, $18.04, down $0.23)

TSEM January 19 calls (TSEM170120C00019000, $0.70, flat)

Entry Price: $0.50 (11/16/2016)

Exit Target: $1.00

Return: 40%

Stop Target: $0.35 (Stop Limit)

Action: Support is at $18-$17.75. Resistance is at $18.25-$18.50.

Trade on!

Rick Rouse
Editor and Chief Options Strategist
Momentum Options